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Friday, May 21, 2010

The tea party will fail, and I submit as evidence, Mr. Rand Paul, the recent winner in KY's GOP primary election. He is backed by the Tea Party and its supporters.

Recently, just after his election win, Mr. Paul went on the Rachel Maddow show and Rachel played some (typical) 'gotcha' journalism and caught him in a loop of trying to explain his positions on discrimination policies, particularly those applied to private companies, and institutions.

Maddow: Do you think that a private business has a right to say that 'We don't serve black people?'

Paul: I'm not in favor of any discrimination of any form. I would never belong to any club that excluded anybody for race. We still do have private clubs in America that can discriminate based on race.

But I think what's important in this debate is not getting into any specific "gotcha" on this, but asking the question 'What about freedom of speech?' Should we limit speech from people we find abhorrent. Should we limit racists from speaking. I don't want to be associated with those people, but I also don't want to limit their speech in any way in the sense that we tolerate boorish and uncivilized behavior because that's one of the things that freedom requires is that we allow people to be boorish and uncivilized, but that doesn't mean we approve of it...

Of course some in the media and on the left have said, due to these statements, that Paul would try to get rid of the Civil Rights Act, or that he's some sort of racist. All that is ridiculous. Frankly, everyone should have expected Paul to say something like that. Because he's something much more scary than a racist: he's an extremist Libertarian (albeit in Republican clothes).

Rand, like many extremist Libertarians are ideologically and narrowly driven in their beliefs. They believe that government should be severely curtailed or abolished altogether, especially as it pertains to private industry and homes (taxes should be cut to next to nothing, subsidies should be eliminated, regulations on behavior, including hiring practices, should be limited to none). It also means condemning any government 'hand-slapping' when private industry does things that are bad for the public (because to an ideologue of this bent, that simply isn't possible). I hope this ideology sounds familiar to you, because it lines up very nicely with the Tea Party's stated beliefs and goals.

And so this brings me to my point. There are reasons that the Rand Paul's of the world, when they speak, don't stay in power long or are not elected in the first place - it's because they are extremists with no room for shades of gray. They believe in abstract principles and make the leap of faith that when practiced, these principles will make sense - without ever really developing any real plans. So, the Tea Party will die as well - because it is based on the same black-and-white extremist philosophy. People are voting for these candidates now because they are scared. Many tea partiers are backing people because they are scared, not because they necessarily agree or even understand the reality behind the Tea Party's principles.
Once the fear dies off, so too will the Tea Party --- along with the Libertarian extremists they support.

What does this have to do with economics? Well I've mentioned myriad times on this blog the connection between mainstream economic thinking and 'black-and-white' textbook ideology. The problem is the same - the reality of our economic system is in sharp contrast to this ideology. But is it fear that keeps the extremist side of mainstream economics alive? No, it's the power and the confusion I believe. They wrap themselves in a cocoon of dazzling math lights, distracting the students until their message simply becomes so convoluted or confusing or assumption-laden, that many just proclaim, well, that must just be 'how things are'. Then from this refusal to think beyond the dazzling light display, comes the power, accumulated over decades. We won't change the system by attacking the power. We will only change the system by exposing the ideology, and breaking the dazzling light display.

Monday, May 10, 2010

When the US is in financial crisis, our Fed, for better or worse, can flood with system with money (either in the form of loan, or just out-and-out money supply cash. And that's exactly what it did in 2008 and 2009, and it did so fairly quickly, and consistently over the months.

The European Central Bank, because it has no real central governing body, and because it represents multiple distinct European countries, takes what seems like forever to initiate emergency monetary policy - causing increased uncertainty and market volatility in the process (the US stock market plunged hundred of points last week on concern for Europe, and then rose by as much today as Europe, with the help of the IMF, finally proposed a bailout package for Greece, Spain and other fiscally irresponsible countries in the Euro Zone.

Garth Brazelton

About Me

I work for the Indiana Economic Development Corporation as the Director of Operations and Business Systems, and I teach macroeconomics at Indiana University (Indianapolis). Previously, I was an Economist at the US DOT in Cambridge, MA. This blog does not represent the opinions of any of these organizations.